Problems with Arcor

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The following Strengths-Weaknesses-Opportunities-Threats analysis will help to identify alternative strategies for Arcor’s planned internationalization.

Strengths. Arcor leader Pagani credits the company’s financial conservatism with helping it weather the Argentine financial crisis. Financial management is definitely one of Acors key strengths, and one which should help the company avoid undue financial risks. Another key strength is the company’s high level of vertical integration, enabling it to minimize supplier power and control operations. The company’s existing leading market position in Latin America is another strength, as is Arcor’s strong foothold (with distribution network and key partnerships as well as strong sales) in the North American market. A strong culture and strong leadership are additional strengths. Arcor’s product mix, which includes strong positions in both chocolate and non-chocolate categories is another strength. Another key strength is the company’s existing state-of-the-art manufacturing facilities which provide a good basis upon which to expand. A young but established distribution arrangement with the world’s largest retailer – Wal-Mart – is yet another

Weaknesses. Limited funding is a key weaknesses as Arcor plots its internationalization strategy. The existing turmoil in the home market is another source of weakness, given that Arcor’s key production facilities are still located there. Another key weakness is the absence of strong brands and the lack of a global brand name awareness. Other key weaknesses include inexperience/lack of presence in the European and Asian markets, and lack of experience in premium product marketing. Arcor’s authoritarian culture and strong commitment to central control, while a strength in many respects, could also be perceived as a weakness in that it impedes flexibility.

Opportunities. Arcor can look forward to numerous opportunities including: opportunities for entry and expansion to Asia; expansion to Europe; market growth and expansion in the United States; entry and expansion in Canada and Mexico; further growth in Latin America; expansion into premium confectionary products; expansion into organic products; expansion into sugar-free, low-fat and “healthy” confections; expansion into non-confectionary products; expansion through acquisition of competitors; and organic growth.

Threats. Arcor faces a number of key threats. Probably the primary threat is that of competition from existing global competitors. From the perspective of a Porter’s (2008) analysis, competition in the global confection industry is intense, with a high degree of consolidation (especially among chocolate manufacturers) and strong commitment to market among existing global brands. Other primary threats include competition from smaller regional/local competitors who may be more attuned with the local markets; the threat of new entrants (while entry barriers are high, the threat exists nonetheless); and threat of substitution (people can substitute other food products for confection, or simply not eat these non-essential food products). Another primary threat is that of cocoa price volatility and increasing power of suppliers. Arcor also faces threats related to changing social/cultural values. For example, health concerns or concerns with obesity could chill demand for products. Other threats include the threat of quality and/or production problems in new operations, the threat of distribution barriers in new markets; and cultural barriers and conflict in marketing.

Recommendations

- Arcor should focus on expanding in the American markets in the coming years ( United States and Latin America). Arcor can focus their resources where they will be most effective.

- Arcor should focus on their candy and gum rather than chocolate since it requires a lot more capital. ( write about the costs - don’t focus on baked goods or anything)

- In the long run, Arcor should develop strategies to tackle the European and Asian market. Currently, Arcor is not in the financial conditions to take on such a large expansion. Moving into the European markets will require a lot of physical capital as well as investment.

United States - candy gum and healthy altervaties and premium choclaates

Latin America - Since the chocolate factory is in latin america it is possible to offer many difernet products.

Europe - premium chocolate

Asia - candy?

SWOT Anylsis!